The Hindu Business Line : Bihar polls delay revamp of KK Birla Group sugar cos

THE ensuing Bihar Assembly elections have delayed the proposed restructuring and finalisation of accounts of two of the four sugar companies of the KK Birla Group.

The group had earlier decided to physically relocate a plant located at Samastipur in Bihar, a flood-prone area, to Uttar Pradesh. This plant belongs to New India Sugar Mills Ltd.

It was also decided to transfer the finances of this unit from New India Sugar Mills to Upper Ganges Sugar & Industries Ltd. The restructuring plan was framed by Ernst & Young.

According to Mr C.S. Nopany, director of Upper Ganges, the company is yet to get formal permission from the Bihar Government on the relocation of the unit from that State.

"It will take some time. Probably, by the end of this month, we might get it. The process has been delayed because of the ensuing Assembly election in that State", Mr Nopany told Business Line.

Earlier, the Bihar Government had also made a futile attempt to convince the KK Birla Group against the proposed relocation with several assurances of checking the annual floods in that region.

As a part of the restructuring exercise, it has also been decided that Saran Trading Co Ltd, a wholly-owned subsidiary of New India Sugar Mills, will first be merged with itself and then its sugar business will be taken out of it and merged with Upper Ganges.

Apart from the sugar business, New India holds some important investments that would remain with it. So, post-merger, New India would become an investment company. It will continue with its existing retailing activities.

As this restructuring exercise is not yet over, Upper Ganges has not yet closed its accounts for the financial year, July-June 2004-05. According to Mr Nopany, on a year-on-year basis, the company recorded net sales of Rs 329.64 crore against Rs 263.07 crore in the previous year.

Profit after tax, after taking into account an exceptional item of Rs 32.28 crore, was Rs 16.81 crore against Rs 14.01 crore. Average price realisation of free-sale sugar increased to Rs 1,572 from Rs 1,256 per quintal.

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